Ex-Diamond CEO leaves with $2.7M

Thursday

Nov 22, 2012 at 12:01 AM

Diamond Foods Inc., formerly based in Stockton and whose walnut-processing plant there is the world's largest such facility, said Wednesday that its former chief executive, Michael Mendes, has resigned after nine months on administrative leave and will walk away with $2.7 million.

Reed Fujii

Diamond Foods Inc., formerly based in Stockton and whose walnut-processing plant there is the world's largest such facility, said Wednesday that its former chief executive, Michael Mendes, has resigned after nine months on administrative leave and will walk away with $2.7 million.

Last week, Diamond restated its financial results for its fiscal 2010 and 2011 years, effectively erasing $56.5 million in reported earnings from its books.

The company and its auditors had found that walnut grower payments of more than $82 million had improperly reported, inflating Diamond's apparent profits.

When the issues came to light in February, the once high-flying Diamond saw its stock dive, its bid to purchase the Pringles snack brand from Procter & Gamble Co. get derailed and Mendes and its former chief financial officer, Steven M. Neil, placed on leave.

Neil was fired Monday and would receive no severance or other separation payment, the company said.

Mendes formally resigned that same day after reaching a "clawback agreement" with Diamond where he would surrender his 2010 and 2011 bonuses, totaling more than $2.7 million and nearly 6,700 shares of stock. But Diamond also agreed that it owed Mendes approximately $5.7 million under his retirement plan.

So the company expects to pay the former chief executive $2.7 million early next month.

Pete Turner, principal of Turner & Associates and a walnut industry consultant, said Wednesday the company remains a major player in the California industry.

"Diamond is more than just Mendes," he said.

But Turner also questioned terms of the executive's departure.

"If I was on the board, he wouldn't be getting a penny," he said. "I don't think he should be getting rewarded for taking that company down the tubes."

Besides restating earnings for two year, Diamond reported a loss of $53.4 million in the first nine months of 2012 due to costs of the accounting investigation and resulting restatements, termination of the Pringles deal and weak walnut business results.

Diamond stock, which trades on the Nasdaq exchange under the DMND ticker symbol, closed at $12.98 a share Wednesday, down 11 cents for the day, and near its 52-week low. The stock ran as high as $40.71 a share in the past year.